DebtX to Sell $4.8B Nonperforming Loan Portfolio for HUD

DebtX announced Wednesday that it will sell $4.8 billion in nonperforming residential loans for the Department of Housing and Urban Development.

The Boston-based company, which operates an online marketplace for loan sales, will sell the portfolio in two parts.

The first offering will take place on June 11, and will consist of 23,200 delinquent loans with $4 billion in unpaid principal balance. The loans will be offered in 16 different pools, ranging from $93 million to $1 billion. One of the pools will include properties concentrated in the Southwest, while the rest will be collateralized by residential properties across the country.

The second offering will include 4,800 loans with $800 million in unpaid principal balance. The sale, scheduled for June 25, will include loans from eight "neighborhood stabilization outcomes" areas that HUD has targeted to reduce foreclosures and stabilize home values. Bidders on such packages (typically nonprofits and community groups) are expected to modify loans, conduct short sales to another owner-occupant or maintain the properties as rentals.

NSO regions in the second offering include Philadelphia, Miami, Chicago, Detroit, San Antonio and Atlanta, as well as San Bernardino County, Calif., and Cumberland County, N.J.

"HUD has taken a clear leadership position in the market, systematically managing its risk through the sale of $17 billion of nonperforming single family loans since late 2012," said Kingsley Greenland, CEO of DebtX, in a May 21 press release announcing the sale.

DebtX will sell the loans as a subcontractor of SEBA Professional Services, a financial advisory firm based in Washington.

Most loan pools are geographically diverse because it is easier for the buyers to get financing, according to Greenland. But the Southwest pool is expected to appeal to bidders that want to turn NPLs into single-family rental properties.